Orient Technologies Limited, an IT solutions provider established in 1997 and headquartered in Mumbai, is set to launch its IPO from August 21 to August 23, 2024. The company offers a broad range of services, including IT infrastructure, IT-enabled services (IteS), and cloud and data management solutions. With a well-established clientele across diverse industries, Orient Technologies is now seeking to raise funds through a public issue to fuel its next growth phase.
IPO Details:
- Price Band: ₹195 – ₹206 per share
- IPO Size: ₹214.76 crore, comprising a fresh issue of ₹120 crore and an offer for sale of ₹94.76 crore.
- Lot Size: 72 shares, translating to a minimum investment of ₹14,832.
- Listing: Shares will be listed on both BSE and NSE.
Use of Proceeds: The funds raised from the IPO will primarily be used to:
- Purchase office space in Navi Mumbai.
- Invest in equipment for setting up a Security Operation Center (SOC) and Network Operation Center (NOC).
- General corporate purposes.
Financial Performance: Orient Technologies has shown consistent revenue growth over the last three fiscal years, with revenues increasing from ₹467.44 crore in FY22 to ₹602.89 crore in FY24. The company’s net income also saw an upward trend, rising from ₹33.49 crore in FY22 to ₹41.45 crore in FY24. Despite these positive trends, the company’s margins have been slightly pressured, with net margins hovering around 7%.
Valuation: The IPO’s price-to-earnings (P/E) ratio is calculated at approximately 17.45x, based on FY24 earnings, which positions it favorably compared to its industry peers, where the average P/E ratio stands at around 29.87x. This suggests that the IPO is fairly priced, offering potential value to investors.
Growth Prospects: Orient Technologies is well-positioned in the rapidly expanding IT services sector, with a diversified service offering and a robust client base. The company’s ongoing investments in infrastructure and technology are expected to drive future growth. Additionally, its strong relationships with prominent clients in the BFSI, IT, and healthcare sectors further enhance its growth potential.
GMP (Grey Market Premium): As of the latest data, the GMP for Orient Technologies IPO stands at ₹32, indicating a positive market sentiment and potential listing gains for investors.
Investment Risks: While the company’s financials are strong, there are inherent risks. These include the possibility of cost overruns in the planned capital expenditures and delays in equipment procurement, which could impact the company’s operations and financial performance. Additionally, the company has experienced negative cash flows from financing and investing activities in the past, which could hinder future growth if these trends continue.
Conclusion: Orient Technologies’ IPO presents an intriguing opportunity for investors, particularly given its fair valuation, robust client base, and growth potential. However, prospective investors should consider the associated risks and keep a close eye on the company’s execution of its expansion plans. For those with a moderate to high-risk appetite, this IPO could be a worthwhile addition to a diversified portfolio.
This analysis provides a comprehensive view of what investors need to consider before subscribing to the Orient Technologies IPO. The decision to invest should be based on individual financial goals, risk tolerance, and a thorough understanding of the company’s growth trajectory and market conditions.
